Wrapping up 2022.
The most positive news for the real estate market this year was last week’s announcement of a fast-track pathway to New Zealand residency.
I have never seen a time when it takes so long for anything to get done. This is very evident in the housing sector where I see a shortage of workers for every property related provider. We read daily about all the other sectors also screaming out for workers and the constraints and pain this is causing.
I hear a lot of conversations agreeing that even though we love being a small country, we can’t have all the baby boomers retiring over the next 15 years without workers established here to take their jobs. We need immigrants now to have enough people for good transition from one generation to the next.
It has been financially risky for immigrants to sell their home overseas and bring their skills to NZ, so why would the best do it? On arrival they can only buy a home if they are from Singapore or Australia, all other immigrants must have New Zealand Residency to buy. This means that immigrants must become tenants on arrival. Anyone who has been looking for a rental property knows the choice is not great and it is harder now investors have stopped buying because of the non-deductibility of interest.
It’s worse than just having limited rental options; on arrival these workers convert their cash to New Zealand dollars and then watch the big opportunities the market currently has for home buyers, without being allowed to buy.
Prices have come back in Lower Hutt this year by around 30% and even with the higher interest rates, the reduction in purchase price has made these homes more affordable. Imagine having sold up in your home country, with cash in the bank and being locked out of the market. I expect, for this reason, New Zealand is off the list for some families, who would otherwise love to be here, working and contributing to our economy.
This update may sound political, and I don’t mean it to be. The politicians will do the right thing when they feel the voters are ready to accept change. Not many years ago, there was huge resistance to medium density housing and town planning rules reflected this. Then when we saw this keeping young people out of home ownership, the ‘Not in My Back Yard’ attitude changed to ‘Yes in My Back Yard’.
As we wind down to the end of 2022, sadly we also see the building sector winding down. We have seen it all before, Boom to Bust. This is happening while our population must grow, through immigration. We are heading for a bigger housing crisis than we have come through unless the banks start funding developers or purchasers to build new homes.
Now that we are near the end of the challenges that 2022 has created for sellers and buyers, everyone thoroughly deserves a good break this Christmas.
Wishing you and your loved ones just that.
